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Funding move is a fast band-aid | comment

Dowling says the $200 million FBT rescue package is too little too late.

Industry Minister, Senator Kim Carr deserves credit for extracting $200 million for Australia’s three local car makers at a time when the Federal Government is slashing budgets. But the $200 million is too little too late. Car company insiders say the deal nearly fell over because it wasn’t enough. And these guys are used to taking money!

For starters, the $3000 concession per car (based on Government estimates, the industry says it will be closer to $1100 per car) will do little to offset the fact that an average wage earner who buys an average-price car will be $8400 worse off over a four-year lease period.

So guess what? As soon as people do the sums, they won’t novate lease a new vehicle. They will do what most other people will do and simply take a car allowance.

This is why the car industry and salary packaging firms are sweating razor blades. The fact is under the new system people simply won’t update their cars as often because it is now suddenly less attractive financially.

And that means the Federal Government won’t get anywhere near the $1.8 billion it was banking on to make up for the scrapping of the carbon tax. And that is why promising $200 million is not even a band-aid. It’s a band-aid that won’t stick.

This reporter is on Twitter: @JoshuaDowling